Dear aspiring leaders, today let’s dive into an intriguing topic that frequently confounds even the most seasoned business professionals: the difference between strategy and planning. We can glean insights from Roger Martin, former dean of the Rotman School of Management and prolific author, who demystifies this topic in his insightful YouTube talk titled “A Plan Is Not a Strategy.”
The Core Difference
First and foremost, Martin states emphatically that planning and strategy are distinct concepts. While the business world often conflates the two, we shouldn’t let this misnomer fool us. Merely labeling a plan as a ‘strategic plan’ doesn’t magically infuse it with strategy. A plan usually consists of a set of activities a company intends to execute – opening a new plant, improving customer experience, launching a talent development program, and so on.
However, these actions aren’t inherently strategic, they are just activities. They lack the coherence and comprehensive vision that a strategy necessitates. Martin beautifully defines strategy as “an integrative set of choices that positions you on a playing field of your choice in a way that you win.”
Planning versus Strategy
The critical difference lies in their nature. A plan is comforting as it typically pertains to resources and costs, things we can control. On the other hand, a strategy outlines an outcome, a competitive victory we wish to achieve. This is reliant on factors outside our control – like customers deciding to buy our product. The strategy focuses on the unpredictable revenue side of the business, whereas planning deals with the more predictable cost side.
This leads us to an important insight: While planning is more comfortable because it is within our control, strategy forces us to take risks, make assumptions, and prepare for an uncertain future. It’s the strategy that positions us to win, not just participate.
The Winning Example of Southwest Airlines
Martin cites the example of Southwest Airlines to drive his point home. While traditional airlines were planning what routes to fly, Southwest developed a distinct strategy that turned them into a substitute for Greyhound. They opted for a point-to-point flight system, only flew one type of aircraft, didn’t offer meals on flights, and encouraged online booking. This differentiated strategy led to significantly lower costs, which allowed them to offer substantially lower prices.
How to Shift from Planning to Strategy
To escape the comfort trap of planning, we must accept that strategy will come with a certain level of angst. The inability to prove in advance that a strategy will succeed may feel uncomfortable. But remember that this acceptance is not indicative of a poor manager, rather, it showcases a great leader.
To craft a successful strategy:
- Clearly outline the logic of your strategy: Understand what must be true for your strategy to work. This allows for continuous evaluation and tweaking as the world unfolds.
- Keep it simple: Overcomplication can blur the clarity of your strategy. If you can capture your strategy on a single page, you’ve probably got it right.
- Continuously refine: Strategy is a journey, and constant refinement will help you get better as you move along.
In conclusion, while planning may provide comfort and stability, strategy provides a pathway to victory. Strategy requires taking calculated risks, making assumptions, and navigating uncertainty – all vital components of transformative leadership. As Roger Martin aptly states, “If you plan, that’s a way to guarantee losing. If you do strategy, it gives you the best possible chance of winning.”
Let us strive not just to plan, but to strategize, to envision a path to victory, to lead, and ultimately to win. Embrace the challenge, for therein lies the opportunity for greatness.